ECLAC calls for addressing with comprehensive policies the trap of high inequality and low social mobility in which Latin America and the Caribbean is mired

Latin America and the Caribbean requires a comprehensive approach to at least five factors behind social inequality in the region, starting with increasing economic growth through new generation productive development policies, said today the Executive Secretary of the Economic Commission for Latin America and the Caribbean (ECLAC), José Manuel Salazar-Xirinachs, at the inauguration of the Fourth Regional Seminar on Social Development “Social protection and inequality: Latin America and the Caribbean towards the Second World Summit on Social Development in 2025”, which will be celebrates until Thursday, June 27.

The meeting, which takes place at the ECLAC headquarters in Chile, brings together Ministers of Social Development, Social Inclusion and Labor from the region, as well as other government authorities, as well as academics and specialists from Argentina, Brazil, Chile, Colombia, Ecuador, Mexico, Peru and Uruguay, among other countries. The program includes thematic panels, three keynote talks and three side events.

“As we have been reiterating, Latin America and the Caribbean is in a development crisis that is expressed in three traps: one of low capacity to grow; one of high inequality and low mobility and social cohesion; and one with low institutional capacity and ineffective governance. This regional seminar seeks to deepen the diagnosis and proposals to break with the hard core that determine, in particular, the trap of high inequality and low social mobility,” explained José Manuel Salazar-Xirinachs.

According to the highest representative of the United Nations regional organization, “inequality has been at the center of ECLAC’s thinking and reflections in its 75 years of life. Inequality is something that not only goes against basic concepts of social justice, but is also inefficient for growth and is corrosive to social cohesion and the stability of social pacts.”

According to the Executive Secretary of ECLAC, the five factors that the region must urgently address to really “move the needle” in terms of reducing inequality in Latin America and the Caribbean are: the productive heterogeneity that characterizes the countries of the region and that does not allow the generation of quality jobs for the majority of the population; the persistence of regressive tax systems and social and social protection policies of limited scope; the still insufficient coverage and low quality of education; gender inequality, and discrimination and human rights violations perpetrated against indigenous people, Afro-descendants and other population groups.

“Low and mediocre growth rates make it very difficult, if not impossible, to promote productive transformation, reduce poverty, reduce informality, create high-quality jobs and generate tax revenue for impactful social policies. All of the above indicates that part of the solution to productive heterogeneity as a cause of income inequality are productive development policies that boost growth and reduce the large differences in productivity between sectors, that reduce productive dualism and stimulate structural change. of production and employment towards sectors and companies with greater productivity,” said José Manuel Salazar-Xirinachs.

The regional meeting also included welcoming words from Manfred Haebig, Principal Advisor of the ECLAC-BMZ/giz Cooperation Program; Laura Oroz Ulibarri, Director in the Directorate of Cooperation with Latin America and the Caribbean of the Spanish Agency for International Development Cooperation (AECID), and Ximena Andión, Deputy Director for the Mexico and Central America Office of the Ford Foundation.

“I hope that this Fourth Regional Seminar on Social Development contributes to the analysis, debate and exchange so that the countries of the region can design and implement public policies that help carry out the triple transition – digital, ecological and socioeconomic -, without leaving anyone behind. ”said Manfred Haebig.

Laura Oroz Ulibarri highlighted “the strategic alliance of the AECID with ECLAC, which now spans 30 years,” and announced that, in a new stage of this association, it seeks to contribute to the strengthening of social institutions in the region to promote cohesion policies. social focused on equality and the effective enjoyment of rights.

Ximena Andión, from the Ford Foundation, also valued “the collaborative work we have done with ECLAC in recent years, because, for us, ECLAC is an institution that has always been at the forefront of discussions on inequality,” and agreed that this issue “crosses the North and the South, very prominently affecting all countries in the world, so we have to continue analyzing it from different perspectives.”

In a special intervention, Paula Narváez, President of the Economic and Social Council (ECOSOC) of the United Nations, urged to seek convergences between the different multilateral processes underway aimed at promoting social development in the world. “The Second World Summit on Social Development, to be held in 2025, is an important pillar in our collective efforts to create momentum to accelerate progress in the implementation of the 2030 Agenda on Sustainable Development,” she said.

Also on the first day of the regional seminar, the presentation of the book took place Non-contributory pension systems in Latin America and the Caribbean: advancing solidarity with sustainabilityedited by Alberto Arenas de Mesa, Director of the Social Development Division of ECLAC, and Claudia Robles, Social Affairs Officer in the same Division, within the framework of the ECLAC-BMZ/giz Project “Transformative reactivation: Overcoming the consequences of “the COVID-19 pandemic in Latin America and the Caribbean.”

“This is the first book published by ECLAC that is dedicated exclusively to the study of non-contributory pension systems in the region. This is essential because these systems constitute a basic pillar to achieve universal, comprehensive, sustainable and resilient social protection systems. Furthermore, these systems are essential to achieve inclusive social development,” the Executive Secretary of ECLAC highlighted at the launch.

According to the publication, non-contributory pension systems have experienced a truly impressive increase in coverage: they went from covering only 3.4% of the population aged 65 and over in the year 2000, that is, just over a million people, to cover 31% of this population in 2022, almost 20 million people. In 2022, only five countries in the region lacked this type of systems.

The book highlights that these systems have become a priority strategy for the eradication of extreme poverty and poverty in old age. Between 2001 and 2022, poverty among people over 65 years of age was reduced by almost half, going from 29% to 15%. In fact, there was more success in reducing poverty in old age than poverty in general, despite the aging process of the population. His contribution to the reduction of gender inequalities through the inclusion of older women in pension systems, among other contributions, also stands out.

“The increase in coverage of non-contributory pension systems contrasts with the reality of contributory pension systems, which remain with significant deficits as a result of high levels of informality and low contribution levels, which do not even reach half of the workforce in the region,” said José Manuel Salazar-Xirinachs, who called for building non-contributory pension systems with adequate coverage and sufficiency of their benefits, and with financial sustainability.

Also participating in the launch were Jeannette Jara, Minister of Labor and Social Welfare of Chile, José Carlos Cardona, Secretary of State in the Office of Social Development of Honduras, and Nicholas Barr, Professor of Public Economics at the London School of Economics and Political Science .

Minister Jeannette Jara pointed out that the ECLAC book on non-contributory pension systems is “a very good synthesis and contribution, which puts at the center the important role of non-contributory solidarity, but also makes it clear that it is not the only type of solidarity (expected in this area).” Furthermore, in the country’s effort to strengthen the entire pension system, with special attention to informal work, the Minister announced the upcoming submission of a bill that will modify the Law on Workplace Accidents and Occupational Diseases creating, among other things, the figure of “monoquotation” for independent workers.

For his part, Professor Nicholas Barr argued that the advantages of non-contributory pensions are not a coincidence. “Design is good economics, good social policy and good politics,” he said.